India's Divi's Labs Q1 profit slumps on drug pricing pressures

HYDERABAD, Aug 14 (Reuters) - Indian pharmaceutical company Divis Laboratories (DIVI.NS) reported a 49.2% fall in quarterly profit, missing analysts estimates, as the generic drug maker grappled with pricing pressures in key markets like the United States.

The company reported a consolidated profit of 3.56 billion rupees ($42.9 million) for the first quarter ended June 30, compared to 7.02 billion rupees a year ago.

Analysts, on an average, had expected a profit of 4.17 billion rupees, according to Refinitiv data.

Revenue from operations fell 21.2% to 17.78 billion rupees.

The Hyderabad-based companys core business is manufacturing of active pharmaceutical ingredients (API), which are chemical compounds in a drug that help produce desired health effects.

Divis Labs is also involved in the contract manufacturing of APIs and intermediates for global companies. Exports to the U.S. and Europe contribute to over 60% of revenue.

In May, the company said there were pricing pressures in some generic APIs, with some firms after the pandemic struggling to get rid of huge stocks of dosages of generic drugs before their expiry date. This, in turn, hurt prices and demand for generic APIs.

Divis Labs said it expects prices to stabilize in the coming quarters.

The company also saw a 6.41% rise in costs of materials consumed during the quarter, it said.

Shares of Divis Labs were trading 0.84% lower at 3,648.25 rupees on Monday after its results, compared to a 0.44% fall in the Nifty pharma index (.NIPHARM).

Smaller rival Laurus Labs (LAUL.NS) last month reported a fall in quarterly profit and revenue, citing reasons including demand softness in its API business. The companys core profit margins sank to a 19-quarter low.

($1 = 82.9470 Indian rupees)